On Thursday, December 17, 2015 at 9:00 a.m. Eastern Time, BIS offered a special one and a half hour webinar. Export Administration officials provided an overview of the Export Administration Regulations involving de minimis, the direct product rule, and second incorporation. Topics included the new decision tree tool available for direct product and de minimis rules to help you determine if your non-U.S.-made item (located outside the U.S.) is subject to the Export Administration Regulations. Scenarios involved both “600 series” and non- 600 series items. Participants were able to submit questions by email during the webinar, and BIS officials responded orally at the end of the presentation

(A) Non-U.S.-made items produced from U.S. non-“600 series” and non-9x515 technology or software, OR from a non-U.S.-made manufacturing plant or major plant component (made from U.S. non-“600 series” and non-9x515 technology or software) are subject to the EAR and may require a license or license exception for export from abroad if all of the following apply:

(1) The U.S. technology or software requires a written assurance as a supporting document for a license as defined in paragraph (o)(3)(i) of Supplement No. 2 to part 748, or as a precondition for use of License Exception TSR in § 740.6 or the EAR (Generally, this means the US technology/software is controlled for NS reasons);

(2) The non-U.S.-made item is subject to national security (NS) controls as designated in the ECCN on the CCL (Supp. No. 1 to part 774 of the EAR); and

(3) The non-U.S.-made item is destined to a destination listed in Country Group D:1, E:1 or E:2 (Supp. No. 1 to part 740 of the EAR).

(B) Non-U.S.-made items produced from U.S. “600 series” or 9x515 technology or software, OR from a non-U.S.-made manufacturing plant or major plant component (made from U.S. “600 series” or 9x515 technology) are subject to the EAR and may require a license or license exception to export from abroad if all of the following apply:

(1) The non-U.S.-made item is produced from “600 series” or 9x515 U.S. technology or software;

(2) The non-U.S.-made item is specified under a “600 series” ECCN or 9x515 of the CCL (Supp. No. 1 to part 774 of the EAR); and

(3) Either or both of the following are true:

(a) For “600 series” non-U.S.-made items, the destination is listed in Country Group D:1, D:3, D:4, D:5, E:1 or E:2 (Supp. No. 1 to part 740 of the EAR); or

(b) For 9x515 non-U.S.-made items, the destination is listed in Country Group D:5, E:1 or E:2 (Supp. No. 1 to part 740 of the EAR).

NOTE:“600 series” or 9x515 non-U.S.-made direct products of U.S technology or software subject to GP3 do not require a license for export from abroad to the new destination unless the new destination would have been prohibited or made subject to a license requirement by part 742, 744, 746, or 764 of the EAR.

NOTE:This guidance does not address items classified as ECCN 0A919. Please see that ECCN entry in the Commerce Control List for guidance.

THEN... the Foreign-made item is subject to the EAR if the U.S.-origin controlled content exceeds:• “600 series” & 9x515 .a - .x items, ‘see-through carve-out’1 item: 0% to Country GroupD:5, 25% to all other destinations.•“600 series” & 9x515 .y items: 0% to China or Country Groups E:1 or E:2, unlimitedto all other destinations.• Non-“600 series,” non-9x515 or non-‘see-through carve-out’1 items: 10 % to CountryGroup E:1, 25% to all other destinations.•Non-“600 series,” non-9x515 or non-‘see-through carve-out’1 items AT only: 10% toCountry Group E:1, unlimited to all other destinations.• EAR99: 10 % to N. Korea and Syria (except food and medicines), unlimited to all otherdestinations.

• “Controlled content” = US-origin items that require a license or License Exception to the ultimatedestination of the non-U.S.-made product. ‘See-through carve-out items’1 are always counted ascontrolled content.• EAR99 items are considered “controlled content” for certain sanctioned countries. • Fair Market Value of the “controlled content” is needed to calculate de minimis percentage

• Content that you don’t have to count: License Exception GBS or items that do not require a license to the ultimate destination of the non- U.S. made product (NLR designated items).

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1 ‘See-through carve-out item’ - Articles described on the U.S. Munitions List (22 CFR part 121) thatpursuant to a specific carve-out note are subject to the EAR when, prior to export, reexport, retransfer, ortemporary import, they are integrated into and included as an integral part of an item subject to the EAR.These items are always considered controlled content for purposes of the de minimis rule.

USML Category VIII(h)(2)-(5), (7), (13), (14), (17)-(19), and (21)-(26) when incorporated into a 9A610 military aircraft

USML Category XV(c)(3) and (e) when incorporated into an item subject to the EAR

Content that is not eligible for de minimis treatment• U.S.-origin “600 series,” 9x515 and ‘see-through carve-out content when the non-U.S.-made items are destined to Country Group D:5 of Supp. No. 1 to Part 740. • Certain 9E003 technology • Certain U.S.-origin components of high performance computers • Encryption 5E002, and encryption commodities and software that don't meet the eligibility criteria in § 734.4(b)• QRS 11 if in commercial standby instrument system or commercial aircraft w/such system• Non-U.S.-made military commodities that incorporate cameras classified under ECCN 6A003.b.4.b

U.S. items are 'incorporated' when all of the following conditions are met:• They are essential to the functioning of the non-U.S.-made equipment,• They are customarily included in the sale of non-U.S.-made items, and• They are exported abroad with the non-U.S.-made item.

Bundling• Software that is configured for a specific commodity, but is not necessarily physically integrated into the commodity.• Eligible software is software that is listed on the Commerce Control List (CCL) and is controlled for anti-terrorism (AT) reasons or software that is designated EAR99 (subject to the EAR, but not listed on the CCL).